On
Appeal from the 189th District Court Harris County, Texas
Trial Court Cause No. 2013-57704

Panel
consists of Chief Justice Frost and Justices Brown and
Jewell.

OPINION

Kem
Thompson Frost Chief Justice

This
appeal arises out of a dispute over ownership of a life
insurance policy. A covered employee under an employee
welfare benefit plan filed suit against an insurance company
and others asserting misrepresentation claims and seeking a
declaratory judgment. The insurance company responded by
filing an interpleader action, in which the covered employee
and the trustee of the benefit plan each asserted ownership
of the policy. The trial court denied a special appearance
and a motion to compel arbitration filed by the trustee. The
trial court also granted the covered employee's
summary-judgment motion, determining as a matter of law that
the employee is the policy owner. The trustee of the employee
welfare benefit plan brings this appeal. We conclude that the
trial court did not err in denying the trustee's special
appearance and motion to compel arbitration, but that the
trial court erred in granting the employee's
summary-judgment motion. We thus affirm in part, reverse in
part, and remand.

I.
Factual and Procedural Background

Appellee/plaintiff
Jo M. Pollack M.D., P.A. (the "Professional
Association") adopted, joined, and agreed to participate
in the Grist Mill Trust Welfare Benefit Plan (the
"Plan"), that, according to its terms, provides
death benefits, as well as other welfare benefits to certain
specified individuals. Appellee/plaintiff Jo Pollack, a
medical doctor, is the sole owner of the Professional
Association. Under the Plan, the Professional Association
made contributions to the Grist Mill Trust (the
"Trust") as trust funds to be held under and in
accordance with the terms of the Plan. Pursuant to the Plan,
these funds were invested in a Penn Mutual Protection Builder
Policy, a life insurance policy with a benefit payable on the
death of Dr. Pollack (hereinafter the "Policy").
The Policy states that the owner and beneficiary of the
Policy are as provided in the insurance application, and the
insurance application provides that the Plan is the owner and
beneficiary of the Policy.

According
to Dr. Pollack, she believed that she was investing in a
retirement plan, the contributions were tax deductible, and
she would have access to the funds in the Policy at any time.
She learned otherwise when the Internal Revenue Service
("IRS") audited Dr. Pollack and the Professional
Association (collectively, the "Pollack Parties")
and assessed interest and penalties on unpaid taxes. During
the IRS audit process, the Pollack Parties learned that the
Professional Association's contributions to the Plan were
not tax deductible.

Dr.
Pollack invested in what the Pollack Parties claimed was a
retirement savings plan. According to the Pollack Parties,
through the Professional Association's contributions to
the Plan, Dr. Pollack could contribute more money into the
Plan than she could in a traditional 401k plan, take tax
deductions for the contributions, and allow the money to grow
tax free. To achieve the favorable tax benefits, all the
money would be used to buy a life insurance policy, which
would provide a tax-free death benefit and would be
overfunded so that it built up a significant cash value that
would grow tax free and would be used for Dr. Pollack's
retirement or other needs. According to the Pollack Parties,
the money Dr. Pollack contributed through the Professional
Association would be used for Dr. Pollack's exclusive
benefit, would be deposited at JP Morgan Chase Bank, and then
paid to a prominent insurance carrier to deposit in the
insurance policy that would insure Dr. Pollack's life.
The terms of the Plan and other relevant documents differed
significantly from Dr. Pollack's alleged understanding of
the transactions.

Contributions
to the Plan

The
Professional Association contributed at least $750, 000 into
the Plan from 2005 through 2010, of which $95, 000 was used
annually to pay premiums for the Policy. Dr. Pollack took tax
deductions equal to the amount of the annual contributions.

IRS
Action Against the Pollack Parties

The IRS
audited the Pollack Parties regarding the contributions into
the Plan because the Plan had failed to comply with IRS
regulations. The IRS held that the transaction was a
non-deductible purchase of a life insurance policy and taxed
Dr. Pollack on the premiums paid on the Policy and assessed
interest and penalties.

The
Pollack Parties' Suit Against Penn Mutual

In
2013, the Pollack Parties filed this suit against appellee
Penn Mutual Life Insurance Company, the insurer under the
Policy, and several other defendants, alleging that the
defendants had made misrepresentations to induce the Pollack
Parties into investing in the Plan. During the course of the
litigation, the Pollack Parties nonsuited their claims
against all defendants, except one whose special appearance
the trial court granted. The Plan document contained a
forfeiture provision, which stated that "[a]ny
litigation brought against the Plan, or threatened against
the Plan either on an individual or a classwide basis will
result in the immediate termination from the Plan of the
individual Participant(s) or Employer(s) bringing such action
or litigation or threatening such action or litigation."
So, the Pollack Parties did not sue the Plan or the
Plan's trustee.

The
Pollack Parties asked the trial court to order Penn Mutual to
recognize Dr. Pollack as the beneficial owner and beneficiary
of the Policy or, alternatively, to award Dr. Pollack
"an amount equal to the value and benefit of ownership
of the [P]olicy."

Notice
of Termination from the Trust

After
the Pollack Parties filed the lawsuit, the Trust advised by
letter that it was terminating the Professional Association,
and Dr. Pollack as a participant, from the Trust pursuant to
the Plan document "for threatening and instigating
litigation against the Plan and its affiliates and attorneys
as well as numerous other acts committed in bad faith against
the Plan."

Penn
Mutual's Counterclaim and Third-Party Petition in
Interpleader Against the Pollack Parties and the Plan

Penn
Mutual filed a counterclaim in interpleader against the
Pollack Parties and a third-party petition in interpleader
against Wayne Bursey, in his Capacity as Trustee of the Grist
Mill Trust Welfare Benefit Plan. Penn Mutual claimed that it
was an innocent stakeholder because Bursey, Dr. Pollack, and
the Professional Association each were claiming to be the
sole owner and beneficiary of the Policy. Penn Mutual pled
that it was unconditionally tendering the "disputed
contractual obligations coming due under the Policy to the
Court's registry." Penn Mutual asked that the
Pollack Parties and Bursey be required to assert their claims
to ownership of the Policy in this case, that the trial court
enjoin them from commencing any further action against Penn
Mutual based on the Policy, and that the trial court render a
declaratory judgment as to which party is the rightful owner
of the Policy. The Pollack Parties answered the counterclaim,
and Dr. Pollack asserted a claim that she is the Policy's
owner and beneficiary.

Bursey's
Special Appearance and Motion to Compel Arbitration

Bursey
filed a special appearance in April 2014, contesting the
trial court's personal jurisdiction over him as alleged
in Penn Mutual's third-party petition in interpleader. A
week later, Bursey filed a motion to compel arbitration and
to stay the interpleader action, subject to the special
appearance. Bursey based his filings on documents the
Professional Association signed. Kathy Kehoe succeeded Bursey
as Trustee of the Plan, and the trial court effectively
allowed Kathy Kehoe, in her capacity as Trustee of the Plan
(hereinafter "Kehoe") to substitute in Bursey's
place as third-party defendant. The record does not reflect
that Bursey or Kehoe has ever filed an answer to Penn
Mutual's third-party petition or that either has ever
asserted a claim that Bursey, Kehoe, or the Plan is the owner
or beneficiary of the Policy. For ease of reference, we refer
to Bursey or Kehoe as the "Trustee." In response to
the Pollack Parties' summary-judgment motion, the Trustee
asserted that the Plan owns the Policy.

Penn
Mutual's Discharge

Penn
Mutual moved for a discharge, requesting that the trial court
(1) require the Pollack Parties and the Trustee to assert
their respective claims to ownership of the Policy in the
interpleader action in the trial court; (2) enjoin them from
commencing or prosecuting any further actions against Penn
Mutual on the Policy; (3) grant a declaratory judgment
awarding ownership of the Policy to the rightful owner; and
(4) release and discharge Penn Mutual from all liability to
any party to the action on account of the matters relating to
the ownership of the Policy. Penn Mutual's counsel
certified that he had conferred with counsel for all parties
to the interpleader action and that all parties were
unopposed to the relief requested in the motion. Neither the
Pollack Parties nor the Trustee responded in opposition to
the motion for discharge.

The
trial court granted the motion for discharge and (1) ordered
that all claims against Penn Mutual be dismissed with
prejudice; (2) discharged Penn Mutual from all liability with
respect to the Policy, except for "express contractual
obligations contained within the Policy and accruing to the
person(s) whom the Court shall adjudge is entitled to
ownership of the Policy at issue"; and (3) restrained
the Pollack Parties and the Trustee from instituting any
action against Penn Mutual for the recovery of the ownership
or surrender value of the Policy, or any part thereof.

Summary
Judgment in Favor of the Pollack Parties

The
Pollack Parties filed a motion for partial summary judgment
as to the ownership of the funds that Penn Mutual had
tendered into the registry of the court, seeking to have the
trial court declare Dr. Pollack the beneficial and equitable
owner of the Policy's cash surrender value. The trial
court granted the Pollack Parties' motion for partial
summary judgment, (1) declaring that Dr. Pollack is the
rightful owner of the interpleaded funds; (2) ordering Penn
Mutual to tender the funds in the Policy to Dr. Pollack; and
(3) ordering the clerk of the court to take all steps
necessary to ensure compliance with the order.

Special
Appearance and Arbitration Denied

On the
same date and just before granting the Pollack Parties'
summary-judgment motion, the trial court signed an order
denying the Trustee's special appearance and motion to
compel arbitration and an order denying the Trustee's
objections to the Pollack Parties' summary-judgment
evidence.

Interlocutory
Appeal

The
Trustee timely filed a notice of interlocutory appeal of the
order in which the trial court denied the special appearance
and denied the motion to compel arbitration. The Trustee
further stated that if this court determined that the order
granting the Pollack Parties' summary-judgment motion is
a final and appealable judgment ...

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